Devastating LA fires may have painful downside for Australians
Australians may face steeper home insurance bills as catastrophic fires in the US add to a growing list of climate disasters driving up premiums.
Natural disasters have fuelled Australians’ insurance costs beyond inflation, analysis from The Australia Institute has shown.
Even events on the other side of the world, such as the raging Los Angeles fires, can still affect Australia – as the factors that increase the frequency and scale of natural disasters globally will also do so within Australia.
This had left disaster-prone regions of Australia almost uninsurable as coverage became unaffordable, The Australia Institute senior research fellow David Richardson said.
“The increasing number, scale and intensity of natural disasters like bushfires, cyclones and floods – due to our changing climate – is a global phenomenon which will impact insurance premiums around the world, including here in Australia,” he said on Tuesday.
“The LA fires are a tragedy which will have global consequences for years to come.”
The reinsurance market – where insurance companies buy insurance from bigger, international organisations to mitigate their own losses from natural disasters – also has a role.
Hurricane Ian, which ripped through Florida in 2022, made 2023 the third-costliest hurricane season on record. In turn, that added to global pressures in the reinsurance sector.
“As the world’s big reinsurers push up premiums to cover their losses from natural disasters, local insurance companies will be forced to do the same,'” Richardson said.
The Los Angeles fires have killed at least 24 people and left thousands more displaced under evacuation orders.
Sewerage, water and power infrastructure has been significantly damaged and more than 12,000 structures have been destroyed.
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The cause of the blaze is still unknown and while government agencies have not yet provided damage estimates, the event could be one of the nation’s most expensive natural disasters.
Private forecaster AccuWeather has estimated the damage and economic loss at $US135 billion ($220 billion) to $US150 billion ($244 billion).
That’s before a return of the hot, dry Santa Ana winds in coming days. They have already fanned the devastating fires, and are expected to bring renewed risk across LA.
– with AAP
